Quote:
Originally Posted by Philip T
Or maybe quit calling everything "inflation" when one set of prices go up and conversely quit calling everything "deflation" when one set of prices go down?
|
They have to learn how to distinguish between Currency Inflation, Interest Inflation, Cost Inflation and Wage Inflation.
Wage Inflation is rare. Last time the US saw that was early 1970s and Nixon's solution was a Wage & Price Freeze. Before that, during the Great Depression and FDR's solution was a Wage & Price Freeze (which is how "health insurance" got crow-barred into employee benefits).
Higher wages cause higher prices. I think we can rule that one out.
Interest Inflation affects the price of things tied to interest rates, like housing, autos, throat-warbler mangroves (pronounced
luxury yachts) and other big ticket items and certain types of loans.
Basically, way too much money is available and that is because interest rates are way too low. Ideally, mortgages should be around 9%-13% Fixed APR.
0% financing is a joke. The car is $15,000 and they're paying $20,000 which would be like "gifting" Toyota and others $5,000. How is it they can give a $1,500 Rebate, $3,000 "customer loyalty bonus" and a "1,000" "cash-back" or "incentive bonus?"
That's because the sticker price is grotesquely inflated, and that's because of low interest rates.
As a whole country-wide, housing prices are inflated because of low interest rates, but you have to examine each MSA (Metropolitan Statistical Area) independently because of volatility and also within each MSA you have to look at individual zip codes or neighborhoods, because certain actions can render those areas very volatile. For example a downtown neighborhood has rising prices because welfare scum are being evicted and the tenements converted to condos, but the welfare scum are piling up in another neighborhood and the media and realtors had to change the name from Westwood to Westwood and East Westwood because housing prices were falling below the original 1950s market value (and so everyone could easily known where the welfare scum lived).
If anyone is interested, here are:
MSA by Cost of Living
MSA by 2009 Census Estimate
Metro and Micro Areas (this is the definitive work)
Quote:
Originally Posted by Philip T
Some things are in surplus -- housing, for example. Basic Econ sez Surplus = Lower Prices. Whenever the Fed and Banks quit manipulation of the supply and financing, surplus housing is bound to continue to go down.
|
One of the things I noticed during the housing fiasco was that rents did not appreciably decrease, at least not in the area where I was, which had only a 60%-70% occupancy rate even though the area surrounds a major university.
I did notice the corporate property owners seem to be affected. Several large corporate owned apartment complexes started offering "move-in specials" of $100 security deposit, then later $100 security deposit and first month's rent free, then later $100 security deposit first and last month's rent free etc.
That is a rent price reduction cleverly devised as a marketing scheme. Still, the private property owners took no action. I'm at a loss to understand why, although for this area the majority are "absentee landlords" so maybe that had something to do with it.
Quote:
Originally Posted by Philip T
Some things are in shortage and/or high demand -- energy and food, for example. Basic Econ sez when there is Shortage or High Demand, prices for these items go Up. When the supply of these catch up to the world growth in demand for them, they will quit climbing.
But neither of these are really "inflation" nor "deflation."
|
That's just garden-variety Cost Inflation.
It's more noticeable, or perhaps more painful today than it would have been in the past.
Go back to the Civil War, and you had the [1st] Great Depression [of the 19th Century] with large government spending and that was followed almost immediately by the Civil War with massive government spending so you had inflation of two forms, Cost Inflation because of shortages and then mild Currency Inflation because of the spending.
The price of corn doubled, but it's overall effect was different then than it is now, because then you had corn, canned corn, creamed corn, corn starch, corn flour, corn meal and corn syrup.
Now, you have that, plus corn is used in so many other products, such as ethanol, and then corn starch is used as binder/filler in ready-to-eat, frozen and other prepared foods, and corn syrup is used in beverages and so on, plus corn is used for feed (and it wasn't in the past) so it affects the price of meat, poultry and especially dairy (because many dairy products like cheese, in particular the semi-artificial and artificial cheese use corn syrup and corn starch).
Oil has the same related problems, with so many things tied to oil. Anyway the issue is that in the past, if the price of something rose, you could usually find a substitute, but now that's almost impossible.
Quote:
Originally Posted by Philip T
Kind of goes back to what this entire thread's unintended sub-theme appears to be. So much mis-information is being attempted to be twisted into meanings and hidden-meanings -- very little of this has any real meaning, anymore.
|
Historically in the US, real inflation (Currency Inflation) has been followed by deflation. There is no situation in the last 200+ years where that has not been true.
The next period of real inflation will occur about 14 years from now, followed by massive deflation about 15 years later.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
